Market Intelligence

Analysts expect Access Bank to outperform in full year


November 6, 2017 | 4:28 am
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Analysts anticipate Access Bank Plc to outperform when the lender release its full year financial results as they retain Buy recommendation on the stock.
The Nigerian lender has been surmounting the headwinds caused by lower oil price and severe dollar shortage as earnings continues to grow.
Access shares have gained 72.06 percent since the start of the year while market capitalization stood at N292.75 billion.
“Our current 12-month TP implies upside potential of 17.46% from current levels; consequently, we recommend a HOLD on the stock,” said analysts at Cordros Limited Securities.
“ACCESS is currently trading at 2017F P/BVPS of 0.5x (below the peer average of 0.9x and the 5-year average of 0.6x) and 2017 FP/E of 3.7x (below the peer average of 4.8x and in line with its 5-year average of 3.7x),” said analysts at Cordros Capital.
Access Bank recorded a 27 percent year on year (y/y) growth in interest from loans and advances as a result of better pricing on the loan portfolio.
A breakdown of interest income shows interest income from loans and advances increased by 27.09 percent to N184.83 billion.

“We have made slight revisions to our estimates and we have moved our valuation horizon to 2018. The overall effect is an increase to our price target to N12.39 from N9.07 previously. We retain a Buy recommendation on the stock,” said analysts at CSL Securities Limited.
The Nigerian lender has a well-diversified loan portfolio with focus on investment grade obligors.
Net loans and advances stood at ₦1.85t trillion as at September 2017 compared with ₦1.86 trillion as at December 2016.

Access Bank has a stable asset quality, underlined by disciplined risk management practices.
NPL ratio inched up 40bps to 2.5 percent in the period from 2.10 percent as at December 2016, reflecting the lagged impact of the unfavourable macro on the loan portfolio. The lender’s NPL still within 2017 guidance of 3.0 percent.
The key drivers of NPLs include Oil & Gas downstream (48%), Real Estate (26%) and Manufacturing (11%).
“We have raised our forecast NPL to 2.55% (previously 2.20%) following the shrinking loan book, but lowered cost of risk estimate to 1.12% (previously 1.32%), resulting in a 3.85% y/y decline in loan loss charges to N21.12billion in FY-17,” said Analysts at Cordros Capital.

Access Bank maintained stable capital and liquidity metrics despite persistent macro challenges and liquidity tightening.
Capital Adequacy Ratio (CAR) of 20.5 percent in Sep’17 (- 30bpsy/y), shows the lender has adequate buffers for growth.

Liquidity Ratio improved 240bps y/y to 46.0 percent in September 2017, in excess of the regulatory minimum.





November 6, 2017 | 4:28 am
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